#LEAPFIN – Alternative Lending: Credit to those who need it the most

Remember that first pitch you made to a prospective VC? Sahil Kini, Principal, Aspada Investments created just that moment of excitement as he quizzed Priya Sharma, Co-Founder, ZestMoney, V Raman Kumar, Chairman, Cashe, Aditya Singh, Co-founder, Creditmate and Nitya Sharma, Co-founder, SIMPL on the life and the lifecycle of alternative lending.

Why is Alternative Lending even a need?

In our country where household debt balloons towards end of life, people needing credit mostly end up paying the highest interest. Alternate data sources could complement and sometimes even substitute a credit bureau score which deems anyone without a score or a score less than 750 is not creditworthy (more than half of our country).

Who needs Alternative Lending?

The really fascinating insight the panellists shared was around who they consider as potentially creditworthy customers. Young salaried professionals starting their first jobs, freelancers with decent income but without a guaranteed monthly pay check, customers at the point of purchase for a consumer durable product were just some of the segments they were evaluating now.

How can you figure out who will pay back?

Is the payment instalment more than 30% of the salary? Chances of payback could be low. Is your customer a regular one? Try reducing interest. The panel shared practical insights on scaling up, including tie-ups with market aggregators.

Here’s hoping that they continue building their solutions while driving improvement in repayment and fraud rates. Only then, the word, “alternate” will become redundant. For those who want to read more, here’s our detailed take on the sector.